CBO Chief Predicts Recession

Douglas Elmendorf, the Congressional Budget Office director, predicted the U.S. will slip back into a recession if sharp spending cuts and tax increases go into effect at the end of the year. Briefing reporters on Wednesday, Elmendorf said the changes would reduce the federal deficit but would also mean there is less government spending to prop up the slowly recovering economy. “We think that economic growth right now is being held back by the anticipation of this fiscal tightening,” Elmendorf said. The cuts are mandated by the Budget Control Act, which was passed to break the stalemate over the debt ceiling.